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Canada Post worker Demian Luereziamo sorts mail at the Canada Post sorting facility on Dixie Rd. at Eglinton Ave., Mississauga. (Fernando Morales/Fernando Morales/THE GLOBE AND M)
Canada Post worker Demian Luereziamo sorts mail at the Canada Post sorting facility on Dixie Rd. at Eglinton Ave., Mississauga. (Fernando Morales/Fernando Morales/THE GLOBE AND M)

Letter writing

Why world's post offices are ailing Add to ...

A few months ago, Tara Seel started doing something her friends and family found quaint. She wrote them letters, even though few replied in kind.

"Typically I'll send a letter and I'll get an e-mail back," Ms. Seel said from Portage la Prairie, Man., where she is an editor at The Daily Graphic newspaper. "It's really sad, because there is nothing better than opening your mailbox and seeing a letter that has nothing to do with paying a bill."

Letter writing, or using the mail service at all, has been falling steadily in recent years thanks to e-mail and the Internet. But the recession has accelerated that trend, causing havoc for postal services around the world. Consider that:

- Mail volumes in Canada are down 8.5 per cent this year, the largest annual decline ever.

- The U.S. Postal Service is expected to lose $7.1-billion (U.S.) in 2009 and has announced plans to cut 57,000 jobs and reduce mail delivery to five days a week from six.

- In Britain, postal workers launched a national strike last week to protest wage cuts and plans to privatize some of the operations.

"The postal business is a very challenging business at the best of times," said Moya Greene, Canada Post Corp.'s chief executive officer. "In the past 15 or 20 years we have seen technology take over more and more of our communications, all kinds of communications."

The recession, she added, "just makes a difficult and challenging business unmanageable."

Canada Post managed to report a $90-million profit in 2008, but that was thanks to $140-million worth of cost cuts.

Without those cuts, Ms. Greene said, the Crown corporation would have lost $160-million. It's planning another $250-million worth of cuts this year and has already reduced some management positions.

The post office is also hiking its prices sharply, with the cost of a regular stamp set to jump by 10 cents over the next five years, to 65 cents.

With volumes dropping and costs climbing, national postal services are scrambling to adjust. Many have been completely privatized and some have become multinational corporations.

The Dutch and German postal services have been buying up post offices across Europe and are now among the largest postal companies in the world. Both are preparing for 2011, when the European Union will dismantle national postal monopolies in all 27 member countries and open mail service to competition.

The Swedish and Danish post offices are in the midst of merging, and the Danish service already owns a stake in La Poste in Belgium.

Australia's post office, meanwhile, has 25 private subsidiaries that offer a range of services from document production and logistics to freight delivery.

Canada Post is revamping as well. It is opening a new mail-processing facility in Winnipeg next year and has started upgrading its 20 other plants, most of which are more than 40 years old (although the program has been delayed because of the recession).

Canada Post is also focusing on its non-letter delivery divisions such as Purolator Courier Ltd.; direct marketing; parcel services; and SmartFlow, which offers a variety of services to business customers.

But Canada Post says it needs more flexibility from unions and government to compete. It wants more freedom to raise money, charge for many services and regulate delivery. It also wants the federal government to reconsider its moratorium on postal outlet closings, noting that 60 per cent of outlets are in rural areas where only 20 per cent of Canadians live.

But those changes won't likely stop the move away from mail any time soon, despite snail-mail fans like Ms. Seel.

Just ask Rod Bell, who runs an advertising agency in Toronto called Channel 500 Inc. "In terms of overall communication, [mail]probably represents 5 per cent," the businessman said. "It's all e-mail."

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